Welltower Inc. · NYSE:WELL
Welltower — Nareit REITworld Annual Conference 2020
42 slides from Welltower's conference presentation, November 2020
Slide 1: Business Update
BUSINESS UPDATE Nareit REITworld Annual Conference | November 2020
Slide 2: Forward Looking Statements
Forward Looking Statements This document contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When Welltower uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “pro forma,” “estimate” or similar exp
Slide 3: Recent Highlights
Recent Highlights Seniors Housing Operating (SHO) Portfolio Update • Total SHO portfolio occupancy declined approximately 150 basis points (bps) during 3Q2020 from 79.9% to 78.4% as compared to our outlook of -125bps to -175bps (1) • 3Q2020 same store net operating income (“SS NOI”) declined -27.3%
Slide 4: Welltower at a Glance
Welltower at a Glance World’s Largest Health and Wellness Real Estate Platform ~1,300 ~22M sq. ft. Senior Living Communities(1) of Outpatient Facilities(1) S&P 500 Baa1 BBB+ BBB+ 4 1. As of 9/30/2020
Slide 5: Welltower Purpose
Welltower Purpose Addressing societal challenges through reimagining and reinventing the built environment for effective health and wellness care delivery 5
Slide 6: Secular Theme | An Aging Population
Secular Theme | An Aging Population 80+ U.S. Population Growth(1) 25 7% Population 80+ (M) 23 YoY Growth (%) 6% 21 19.7M 5% The Aging Population is 19 growing exponentially, 4% and outspends every other 17 15.6M age cohort combined on 15 13.2M 3% health care 2% 13 1% 11 9 0% 1. United States Census
Slide 7: Secular Theme | Social Determinants of Health
Secular Theme | Social Determinants of Health 80% of an individual’s health and wellness is influenced by social determinants(1) Physical Environment Safety Housing Transportation & Accessibility 10% 40% Socioeconomic factors Health Care 20% Drivers of Food Security Financial Community Health & Nutr
Slide 8: Secular Theme | The Need for Value-Based Care
Secular Theme | The Need for Value-Based Care The US spends the most per capita on health care, yet achieves significantly lower health outcomes Health Care vs Social Care Spend(1) Health Care Spend vs. Life Expectancy(2) Social Care Spend Health Care Spend 84 100% NOR NLD FRA 82 AUS NZL 80% Life Ex
Slide 9: Portfolio Composition
Portfolio Composition(1) 7% 8% 16% 23% 37% 3Q 2018 48% 3Q 2020 11% IPNOI IPNOI 10% 18% 22% Seniors Housing Operating Seniors Housing Triple-Net Long-Term / Post-Acute Care Outpatient Medical Health System 1. Based on In-Place NOI. See Supplemental Financial Measures at the end of this presentation f
Slide 10: Seniors Housing Operating & Triple-Net Portfolio Update
SENIORS HOUSING OPERATING & TRIPLE-NET PORTFOLIO UPDATE
Slide 11: Spectrum of Seniors Housing
Spectrum of Seniors Housing Seniors housing has many forms across acuity and cost spectrums from addressing the needs of the active senior who is looking for a home that is purpose-built and affordable to higher acuity in high barrier to entry markets $ Relative Cost of $$$ Care Senior Independent A
Slide 12: Seniors Housing Operator Platform | Power of Diversification
Seniors Housing Operator Platform | Power of Diversification Diversity Across Acuity, Geography and Operating Model Operator Diversification | Average Monthly Rent vs Average Portfolio Acuity $$$ Monthly Rent $ Low Average Portfolio Acuity High 12
Slide 13: SHO Portfolio | YTD Observations
SHO Portfolio | YTD Observations Total SHO Portfolio Month-End Occupancy(1,2) 86% -80 bps 85% -230 bps 84% 83% -170 bps 82% -90 bps 81% -60 bps 80% -60 bps -30 bps 79% -40 bps 78% 77% February March April May June July August September October 1. Occupancy represents approximate month end occupancy
Slide 14: SHO Portfolio | 3Q2020 Observations
SHO Portfolio | 3Q2020 Observations Revenues • SHO portfolio(1) spot occupancy declined approximately 150bps from June 30, 2020 to 78.4% • SHO same store REVPOR(2) declined 1.0% year-over-year in 3Q2020 as compared to 3Q2019 partially driven by a shift in acuity mix resulting from more muted occupan
Slide 15: SHO Portfolio | Move Ins & Move Outs
SHO Portfolio | Move Ins & Move Outs(1) Indexed Move Ins Since February Indexed Move Outs Since February 120 120 22% Decline 76% Decline Feb → Oct Feb → Apr 109.0 100 100 101.8 100.0 100.0 208% Increase Apr → Oct 80 80 84.5 82.8 82.9 78.2 78.4 79.6 77.5 73.1 74.0 71.3 60 65.1 60 53.9 40 40 29.7 20 2
Slide 16: SHO Portfolio | COVID-19 Impact
(1) SHO Portfolio | COVID-19 Impact Operations Update Resident COVID-19 Cases – Trailing Two Weeks 600 517 500 472 458 • Elevated cleaning and social distancing protocols remain in 400 352 353 place to protect residents and staff • Most communities allowing indoor visitation and communal 303 300 246
Slide 17: SHO Portfolio | Near-Term Outlook
SHO Portfolio | Near-Term Outlook Revenues • We anticipate SHO portfolio spot occupancy to end the fourth quarter approximately 75bps to 125bps lower than September 30, 2020 • Year-over-year occupancy declines in 4Q2020 expected to be more pronounced than in 3Q2020 given a stronger comparison period
Slide 18: Triple-Net Portfolio Update
Triple-Net Portfolio Update 98% of rent due in 3Q20 collected in Triple-Net portfolio Triple-Net Coverages(1) Operations Financials 2Q20 3Q20 Near-term pressure on coverage ratios is EBITDAR 1.04x 1.02x expected as fundamental performance is Recent operational headwinds comparable to anticipated to
Slide 19: COVID-19 Path to Recovery
COVID-19 Path to Recovery Vaccine/Therapeutics Progress • Pfizer/BioNTech and Moderna recently announced a 90% and 94.5% efficacy rate, respectively, for a COVID-19 vaccine during clinical trials(1,2) • Eli Lilly was recently granted Emergency Use Authorization (EUA) by the FDA for its monoclonal an
Slide 20: Vaccine and Therapeutics Timeline
Vaccine and Therapeutics Timeline 2Q20 3Q20 4Q20 2021 2Q20 Welltower engaged in active dialogue with CVS/Omnicare, Walgreens, and academic partners on testing, vaccine distribution and therapeut ics 3Q20 Gilead granted emergency use authorization (EUA) for Remdesivir(1) 3Q20 Welltower engaged in act
Slide 21: Outpatient Medical Update
OUTPATIENT MEDICAL UPDATE 21
Slide 22: Outpatient Medical | Market Leading Platform
Outpatient Medical | Market Leading Platform Diversified portfolio across geographies and health systems SQ. FT. 0 300K Growing Relationships with Key Health System Partners 22 As of 9/30/2020
Slide 23: Outpatient Medical | Update
Outpatient Medical | Update Operations • 93.6% portfolio occupancy at September 30, 2020 • All buildings are open and operating with enhanced maintenance and cleaning protocols Financial • Approximately 99% of rent due in 3Q2020 has been collected or had deferral requests approved by WELL • Deferred
Slide 24: Balance Sheet & Investments Update
BALANCE SHEET & INVESTMENTS UPDATE 24
Slide 25: Balance Sheet & Investment Highlights
Balance Sheet & Investment Highlights Year-to Date 2020 Update Liquidity ($M) October 26, 2020 • Reported Net Debt/Adjusted EBITDA(1) of 6.02x as of September 30, Cash and Cash Equivalents(2) $2,200 2020 Undrawn Line of Credit Capacity $3,000 • Enhanced near-term liquidity to $5.2 billion as of Octo
Slide 26: Balanced and Manageable Debt Maturity Profile
(1,2) Balanced and Manageable Debt Maturity Profile Weighted Average Maturity of 7.4 years USD Unsecured USD Secured CAD Unsecured CAD Secured GBP Unsecured WAI 4,000M 4.48% 3,500M 4.17% 4.17% 3.87% 3.88% 3,000M 3.57% 3.26% 2.96% 2,500M 2.80% 2,000M 1.98% 1,500M 1.64% 1,000M 500M 0M (in Millions USD
Slide 27: Environmental, Social and Governance (ESG)
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
Slide 28: GHG Emissions Reduction
GHG Emissions reduction 8.5% over baseline Sustainability Goals Publication and Advancement 10% reduction in GHG emissions Invested in $13.7M efficiency projects 10% reduction in water use Efficiency projects 239 implemented 10% reduction in energy use LED retrofit projects by 2025 84 in 2019 Estima
Slide 29: Inaugural Green Bond | Effective Access to Capital
Inaugural Green Bond | Effective Access to Capital $500M 7-Year note at 2.7% ✓ First U.S. health care REIT to issue Green Bond ✓ WELL’s lowest coupon on 7-year note ✓ Demand 7.0x oversubscribed ✓ Over 100 investors consisting of high-quality asset managers, insurance funds, hedge funds, and central
Slide 30: Case Study in Green Buildings | Signature at Wandsworth Common
Case Study in Green Buildings | Signature at Wandsworth Common Green Building Spotlight | Signature at Wandsworth Common Welltower Building Certifications • “Excellent” BREEAM rating Signature at Wandsworth Common is • Combined heat and power units Welltower’s latest development in the United • Phot
Slide 31: Social | Solid Diversity and Inclusion Foundation
Social | Solid Diversity and Inclusion Foundation EMPLOYEE NETWORK GROUPS CORE Women’s Network is one of the earliest REPEATED EXTERNAL ADVOCATION and most robust diversity groups amongst our AND RECOGNITION FOR DIVERSITY peers. This year we have created new ENGs such as: Af-Am, Hispanic, LGBTQIA+.
Slide 32: Governance | Great Governance is Good Business
Governance | Great Governance is Good Business G&A as % of Enterprise Value(1) 1.00% 80% 0.80% Female and Minority Leadership on the Board of Directors(2) HC REIT Avg 0.60% ISS ESG Governance Score(3,4) 0.40% Peers 7 0.20% Welltower 3 Low Risk High Risk 0.00% LTC MPW SNH SBRA DOC HR VTR HTA OHI PEAK
Slide 33: Supplemental Financial Measures
Supplemental Financial Measures 33
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures We believe that revenues, net income and net income attributable to common stockholders ("NICS"), as defined by U.S. generally accepted accounting principles ("U.S. GAAP"), are the most appropriate earnings measurements. However, we consider EBITDA, Adjusted EBITDA, Net O
Slide 35: NOI, IPNOI, SSNOI, REVPOR & SS REVPOR
NOI, IPNOI, SSNOI, REVPOR & SS REVPOR We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated with managing, maintaining and servicing tenants for our properties. These expenses include, but are not li
Slide 36: In-Place NOI Reconciliations
In-Place NOI Reconciliations (dollars in thousands) 3Q20 3Q18 In-Place NOI by property type 3Q20 % of Total Net income (loss) $ 394,978 $ 84,226 Seniors Housing Operating $ 664,244 36.6 % Loss (gain) on real estate dispositions, net (484,304) (24,723) Seniors Housing Triple-Net 409,032 22.5 % Loss (
Slide 37: SSNOI Reconciliation
SSNOI Reconciliation (dollars in thousands) 3Q20 3Q19 % growth YOY 2Q20 % growth QOQ Net income (loss) $ 394,978 $ 647,932 $ 159,216 Loss (gain) on real estate dispositions, net (484,304) (570,250) (155,863) Loss (income) from unconsolidated entities 5,981 (3,262) (1,332) Income tax expense (benefit
Slide 38: SHO REVPOR Growth Reconciliation
SHO REVPOR Growth Reconciliation (dollars in thousands, except SS REVPOR ) 3Q20 3Q19 SHO SS REVPOR Growth Consolidated SHO revenues $ 742,065 $ 835,496 Unconsolidated SHO revenues attributable to WELL(1) 42,568 42,936 SHO revenues attributable to noncontrolling interests(2) (58,500) (73,181) SHO pro
Slide 39: SHO SS REVPOR Growth Reconciliation (cont.)
SHO SS REVPOR Growth Reconciliation (cont.) (dollars in thousands, except SS REVPOR ) Assisted Living (1) Independent Living (1) Total 3Q20 3Q19 3Q20 3Q19 3Q20 3Q19 SHO SS revenues(2) $ 444,365 $ 500,215 $ 204,426 $ 214,305 $ 648,791 $ 714,520 Avg. occupied units/month(3) 18,174 20,744 21,531 22,527
Slide 40: EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA We measure our credit strength both in terms of leverage ratios and coverage ratios. The leverage ratios indicate how much of our balance sheet capitalization is related to long-term debt, net of cash and Internal Revenue Code (“IRC”) Section 1031 deposits. We expect to ma
Slide 41: Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA (dollars in thousands) Three Months Ended Three Months Ended September 30, September 30, 2020 2020 Net income $ 394,978 Lines of credit and commercial paper(1) $ — Interest expense 124,851 Long-term debt obligations(1) 13,889,030 Income tax expense (benefit) 2,003 Cash an
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